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The concept of purchasing power parity (PPP) has been the subject of numerous studies, many of which have been unable to prove conclusively this core principle of international finance. Although industrialized countries have received most of the attention, studies that focus on less-developed and transition economies have also attained mixed results. This study surveys trends in this branch of the literature, highlighting the econometric advances that have sought to solve this puzzle, while pointing out that more needs to be done to address the reasons that might cause PPP not to hold. [ABSTRACT FROM AUTHOR]

Among the fundamental causes of long-run economic performance, differences in ‘institutions’ have received considerable attention in recent years. At the same time, a large body of theoretical and empirical work shows that financial development can have a big effect on economic performance. This raises the more fundamental question as to why some countries have developed financial markets while others do not. This paper reviews the theoretical and empirical research on this issue and shows that one of the channels whereby better institutions may have an effect on economic development is through the consolidation of larger and better financial markets. An issue that is left aside in this paper relates to what regulations and policies lead to better functioning capital markets. At some level, one can think of regulations and policies as particular types of institutions. Nonetheless, institutional problems are deeper causes leading to poor economic performance; bad policies might simply be part of the channels through which they influence performance. Thus, addressing the question of what determines the emergence of ‘good’ institutions – i.e. institutions that promote financial development – seems particularly important. Recent research providing some answers to this question is also reviewed. [ABSTRACT FROM AUTHOR]

This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries' labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to make employment more volatile, by raising the elasticity of labour demand and the risk of job losses. Service offshoring exerts at most small negative effects on total employment, and changes the composition of the workforce in favour of high-skilled white-collar employees. Multinationals tend to substitute domestic and foreign labour in response to changes in relative wages across countries; substitutability is weak, however, and mainly driven by horizontal, market-seeking foreign direct investments. [ABSTRACT FROM AUTHOR]

The aim of this paper is to apply recently developed panel cointegration techniques proposed by Pedroni ( Oxford Bulletin of Economics and Statistics 61 (1999): Supplement, 653–670; Econometric Theory 20 (2004): 597–625) and generalized by Banerjee and Carrion-i-Silvestre (Working Paper 591, European Central Bank, February 2006) to examine the robustness of the PPP concept for a sample of 80 developed and developing countries. We find that strong PPP is verified for OECD countries and weak PPP for Middle East and North African countries. However, in African, Asian, Latin American and Central and Eastern European countries, PPP does not seem relevant to characterize the long-run behavior of the real exchange rate. Further investigations indicate that the nature of the exchange rate regime does not condition the validity of PPP, which is more easily accepted in countries with high rather than low inflation. [ABSTRACT FROM AUTHOR]

This paper provides a systematic review of studies on the effects of human capital interventions on entrepreneurial performance in industrialized countries. We identify 21 experimental and quasi‐experimental studies published before September 2018. These studies examine the effects of business training, formal education, and entrepreneurship education. Their performance outcomes include firm profits, firm size, and entrepreneurial earnings. The main finding across these studies is that these interventions do not have statistically significant effects. Formal education is the only exception, showing positive effects on firm profits and entrepreneurial earnings, yet these effects are small in magnitude. Evidence is inconclusive regarding effect duration. These findings stand in stark contrast to correlational studies, which tend to find large positive correlations between human capital interventions and entrepreneurial performance. We therefore conclude that correlational studies tend to overestimate the benefits of human capital interventions. Moreover, our estimates show that the interventions are associated with moderately low additionality. [ABSTRACT FROM AUTHOR]

Financial account liberalizations since the second half of the 1980s paved the way for the burgeoning literature that investigates foreign exchange market efficiency in emerging markets (EMs) via testing for the uncovered interest parity (UIP) condition. This paper is the first to provide a broad and critical survey on this recent literature. Specifically, we attempt to answer the following questions. First, are the EMs different from the developed economies in the context of the UIP condition? Second, to what extent can these differences contribute to the debate on the UIP literature? Third, what are the empirical challenges specific to the EMs in testing for the UIP condition? [ABSTRACT FROM AUTHOR]

This paper provides a review of empirical studies into the impact of formal schooling on entrepreneurship selection and performance in industrial countries. We describe the main effects found in the literature, we explain the variance in results across almost a hundred studies, and we put the empirical results in the context of related economic theory and the much further developed literature in labor economics (studying the rate of return to education among wage employees). Five main conclusions result from this meta-analysis. First, the impact of education on selection into entrepreneurship is insignificant. Second, the effect of education on performance is positive and significant. Third, the return to a marginal year of schooling is 6.1% for an entrepreneur. Fourth, the effect of education on earnings is smaller for entrepreneurs than for employees in Europe, but larger in the USA. Fifth, the returns to schooling in entrepreneurship are higher in the USA than in Europe, higher for females than for males, and lower for non-whites or immigrants. In conclusion, we offer a number of suggestions to move the research frontier in this area of inquiry. The entrepreneurship literature on education can benefit from the technical sophistication used to estimate the returns to schooling for employees. [ABSTRACT FROM AUTHOR]

The rapid development of artificial intelligence (AI) not only represents a scientific breakthrough but also has impacts on human society and economies, as well as on the development of economics. This paper focuses on the macroeconomic perspective, reviewing recent literature in order to answer three key questions. First, what approaches are being used to represent AI in economic models? Second, will AI technology have an impact on the economy different from that of previous new technologies? Third, in which aspects will AI have an impact, and what is the empirical evidence for these effects of AI? On the first question, our review reveals that the incorporation of AI into economic models raises fundamental questions on economics and economic models. On the second question, while most empirical studies cannot deny the existence of the Solow Paradox for AI technology, some studies find that AI would have a different and broader impact than previous technologies. On the third question, studies on the labor market seem to suggest a stylized fact regarding the impact of AI on employment on different levels, and income inequality across skill levels and between developing and developed countries. The impacts of AI on international trade and education have been largely neglected and are worth further research in the future. It is also important for both theoretical and empirical studies to have a clear and accurate definition of AI so that the results are not misinterpreted. [ABSTRACT FROM AUTHOR]

There is now a large volume of growth accounting estimates covering the long run experience of advanced countries. However, most of the studies in economic history are not based on state‐of‐the‐art methods. There is a trade‐off between maintaining international comparability and achieving the best results for individual countries. A one‐size‐fits‐all approach will not always do justice to the variety of historical experiences since the conventional assumptions may sometimes be inappropriate. Nevertheless, growth‐accounting studies have produced some eye‐catching results which provide food for thought both for economic historians and for growth economists. These include (1) the finding that TFP growth was comparatively slow during the First Industrial Revolution, (2) Solow's famous conclusion that TFP growth accounted for 7/8ths of American labour‐productivity growth was atypical, (3) the impact of new general‐purpose technologies on growth typically takes a long time to materialize, ICT being the notable exception and (4) that capital‐deepening was much more important relative to TFP growth in east Asian than in western European catch‐up growth. Growth accounting is undoubtedly a valuable item in the cliometrician's toolkit. Nonetheless, we anticipate the introduction of more sophisticated methods and look forward to progress in understanding what explains marked differences in TFP performance. [ABSTRACT FROM AUTHOR]

Vector-borne diseases (VBDs) are widespread in less developed countries and reemerging in developed ones. Available economic studies agree that VBDs have significant effects on countries' economic outcomes, and affirm that a systematic evaluation of such effects is crucial for the efficient allocation of resources to health-related priorities. This paper provides a comparative assessment of available methodologies for measuring the economic impact of VBDs at national level. We review both macroeconometric and micro-based approaches, and examine advantages and disadvantages of current methods. We conclude by suggesting possible areas for future research. [ABSTRACT FROM AUTHOR]

We undertake a meta‐analysis of the effects of international investment agreements for the protection of foreign investors on foreign direct investment using 2107 estimates drawn from 74 studies. Our meta‐analysis finds robust evidence that effect of international investment agreements is so small as to be considered zero. However, our results do not rule out the possibility that the effect of these agreements is, in fact, positive and that current research methods are insufficiently powerful or precise to identify the underlying genuine effect. FDI from developed countries appears to be more responsive to the existence of investment protection, and there is evidence of publication–selection bias in favour of studies that find a positive effect for investor protection. [ABSTRACT FROM AUTHOR]

The aid effectiveness literature (AEL) consists of empirical macroeconomic estimates of the effects of development aid. By the end of 2004, it comprised 97 econometric studies of three families of related effects. Each family has been analyzed in a separate meta-analysis. The AEL is an ideal subject for meta-analysis as it uses only a few formally similar models to estimate the same underlying effects. It is also an area with strong beliefs, often generated by altruism. When this whole literature is examined, a clear pattern emerges. After 40 years of development aid, the preponderance of the evidence indicates that aid has not been effective. We show that the distribution of results is significantly asymmetric reflecting the reluctance of the research community to publish negative results. The Dutch disease effect on exchange rates provides a plausible explanation for the observed aid ineffectiveness. [ABSTRACT FROM AUTHOR]

This paper studies the links between macroeconomic adjustment and poverty. The first part summarizes some of the recent evidence on poverty in the developing world. The second reviews the various channels through which macroeconomic policies affect the poor, whereas the third is devoted to the specific role of the labor market. It presents an analytical framework that captures some of the main features of the urban labor market in developing countries and studies the effects of fiscal adjustment on wages, employment, and poverty. The fourth part presents cross-country regressions linking various macroeconomic and structural variables to poverty. Higher levels and growth rates of per capita income, higher rates of real exchange rate depreciation, better health conditions, and a greater degree of commercial openness lower poverty, whereas inflation, greater income inequality, and macroeconomic volatility tend to increase it. Moreover, the impact of growth on poverty appears to be asymmetric; it seems to result from a significant relationship between episodes of increasing poverty and negative growth rates. [ABSTRACT FROM AUTHOR]

In contrast to the commonly held view, Bergh and Henrekson (2011) conclude that a consensus has almost been reached on the thesis that government size is negatively correlated with economic growth in developed countries. They underpin this by claiming that the only study in the survey to deviate from this consensus view, i.e. Colombier (2009), was rebutted by Bergh and Öhrn (2011). This comment shows that the claim by Bergh and Henrekson (2011) cannot be upheld because the analysis by Bergh and Öhrn (2011) is based on a flawed dataset. The re-estimation of Colombier's (2009) regressions with time-fixed effect does not reject his main findings. Moreover, it is demonstrated that recent empirical evidence on the growth impact of government size in rich countries is not as unanimous as the survey by Bergh and Henrekson (2011) suggests. Thus, the claim that a consensus view has been reached is premature. [ABSTRACT FROM AUTHOR]

The financial sector has always played a central role in economic development, but analysis of its precise role has been hampered by the emphasis on ‘real’ factors in the main stream of economic thought and the static nature of financial theory. Empirical studies confirm the importance of finance to economic development, but are indecisive on the efficaciousness of the widely advocated policies associated with financial liberalisation. To be successful, strategies for financial liberalisation must deal with problems generated by asymmetric information and have policies to promote competition, the disclosure of information and the maintenance of governmental integrity. [ABSTRACT FROM AUTHOR]

Economic activities are highly clustered. Why is geographic concentration becoming a predominant feature of industrialized economies? On the basis of the empirical models developed by the new theories of international trade, our answer is that increasing returns are the driving force of economic geography in the US as well as in Europe. In so doing, we review several econometric methods proposed in the literature to separate and to test alternative theoretical paradigms. [ABSTRACT FROM AUTHOR]